Thursday, May 26, 2016


While the PATH Act (The Protecting Americans from Tax Hikes Act of 2015) made many of the popular “tax extenders” permanent, the following items were extended through December 31, 2016 only.  They will no longer be available on 2017 and beyond returns.  So 2016 is the last chance you have to claim a deduction -

1. Exclusion of up to $2 Million of Cancellation of Debt (COD) Income from Foreclosure of Principal Personal Residence. 

2. Deduction for Tuition and Fees – the above-the-line deduction of $4,000 or $2,000 of qualified tuition and fees for both undergraduate and graduate education.

3. Itemized Deduction for Mortgage Insurance Premiums 

4. Lifetime Maximum $500 Residential Energy Credit of 10% on Qualified Energy Efficient Purchases and Improvements.

For the Residential Energy Credit you have until December 31st to make a purchase that qualifies for the benefit.

This energy credit has a $500 lifetime maximum.  If you claimed over $500 in energy tax credits from 2006 - 2015 you are not eligible for a credit for 2016, so an additional energy efficient purchase will not provide any federal tax benefit.

The credit is available for -

* Biomass Stoves

* Heating Ventilating, Air Conditioning (Advanced Main Air Circulating Fan, Air Source Heat Pumps, Central Air Conditioning, Gas, Propane, or Oil Hot Water Boiler, and Natural Gas, Propane or Oil Furnace)

* Insulation

* Roofs (Metal and Asphalt)

* Water Heaters (Gas, Propane or Oil Water Heater, and Electric Heat Pump Water Heater)

* Windows, Doors, and Skylights

There are specific dollar limitations and “proficiency” requirements for each of the above items.  For example the lifetime deduction for qualified windows, doors, and skylights is $200.  And you cannot just purchase new windows for your home - the windows must be “ENERGY STAR certified”.   Gas, propane, or oil water heaters must have be “recognized as ENERGY STAR Most Efficient 2016” and have an AFUE >= 95.

You can go online to a special section of the Energy Star website to find out what the specific qualifications are for individual items.

Make sure your purchase qualifies for the credit – do not expect your tax preparer to waste his or her valuable time during the filing season investigating your purchase.  When giving the purchase information to your tax pro also include any Manufacturer’s Certification statement or other documentation, or your affirmation that you have checked carefully and found that the purchase definitely qualifies for the credit.  


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